Insurance, Mercantile Law

GERCIO v. SUN LIFE ASSURANCE G.R. No. 23703 September 28, 1925 Rights of a Beneficiary in an ordinary Life Insurance Policy, Insurable Interest

FACTS:

On January 29, 1910, Sun Life Assurance Co. of Canada issued insurance policy No. 161481 on the life of Hilario Gercio. By its terms, the insurance company agreed to insure the life of Hilario to be paid him on February 1, 1930, or if the insured should die before said date, then to his wife, should she survive him. The policy did not include any provision reserving to the insured the right to change the beneficiary.

On the date the policy was issued, Andrea Zialcita was the lawful wife of Hilario. Towards the end of the year 1919, she was convicted of the crime of adultery, and a decree of divorce was issued, which had the effect of completely dissolving their marital bonds.

In 1922, Hilario formally notified the Sun Life that he had revoked his donation in favor of Andrea Zialcita, and that he had designated in her stead his present wife, Adela Garcia de Gercio, as the beneficiary of the policy. He requested the insurance company to eliminate Andrea Zialcita as beneficiary. This, the insurance company has refused and still refuses to do.

The judgment of the trial court was in favor of Gercio, and ordered the defendant company to eliminate from the insurance policy the name of Andrea Zialcita as beneficiary.

ISSUE:

Whether the insured — the husband — has the power to change the beneficiary — the former wife — and to name instead his actual wife, where the insured and the beneficiary have been divorced and where the policy of insurance does not expressly reserve to the insured the right to change the beneficiary.

RULING:

The wife has an insurable interest in the life of her husband. The beneficiary has an absolute vested interest in the policy from the date of its issuance and delivery. So when a policy of life insurance is taken out by the husband in which the wife is named as beneficiary, she has a subsisting interest in the policy.

If the policy contains no provision authorizing a change of beneficiary without the beneficiary’s consent, the insured cannot make such change. Accordingly, it is held that a life insurance policy of a husband made payable to the wife as beneficiary, is the separate property of the beneficiary and beyond the control of the husband.

As to the effect produced by the divorce, the Philippine Divorce Law, Act No. 2710, merely provides in section 9 that the decree of divorce shall dissolve the community property as soon as such decree becomes final. Therefore, in the absence of a statute to the contrary, that if a policy is taken out upon a husband’s life the wife is named as beneficiary therein, a subsequent divorce does not destroy her rights under the policy.

It will be proper, in the first place, to ascertain what is an insurable interest.

It is well settled that a man has an insurable interest in his own life and in that of his wife and children; a woman in the life of her husband; and the creditor in the life of his debtor. Indeed it may be said generally that any reasonable expectation of pecuniary benefit or advantage from the continued life of another creates an insurable interest in such life. And there is no doubt that a man may effect an insurance on his own life for the benefit of a relative or friend.

It is indeed the general rule that a policy, and the money to become due under it, belong, the moment it is issued, to the person or persons named in it as the beneficiary or beneficiaries, and that there is no power in the person procuring the insurance, by any act of his, by deed or by will, to transfer to any other person the interest of the person named.

The rights of a beneficiary in an ordinary life insurance policy become vested upon the issuance of the policy, and can thereafter, during the life of the beneficiary, be defeated only as provided by the terms of the policy.

On the admitted facts and the authorities supporting the nearly universally accepted principles of insurance, we are irresistibly led to the conclusion that the question at issue must be answered in the negative.

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